Cultivating Best Practices for Staying Ahead of Trends and - PowerPoint PPT Presentation

Cultivating Best Practices for Staying Ahead of Trends and Developments in the Banking Industry Jean Philippe Soubry Compliance Services Director, Asia Pacific SWIFT

A. THE GLOBAL PAYMENTS INITIATIVE (GPI) B. DE-RISKING: FACTS & FIGURES C. SWIFT FCC: WHAT’s NEW? D. KYC and CYBER SECURITY

SWIFT gpi: secure, faster, traceable & transparent cross-border payments Intermediary Traceable Your bank 2 bank End-to-end payment tracking gpi a1700db1-90b2-4948-83d8-6309c5c34a3d Invoice SWIFTgpi Your company Rulebook $ 1 Faster payments Beneficiary’s bank Same day use of funds* Beneficiary 4 Full remittance data 3 Transparent fees Unaltered reconciliation info Deducts and FX *Within the time zone of the receiving gpi member 5 Singapore Business Forum - February 2017

A. THE GLOBAL PAYMENTS INITIATIVE (GPI) B. DE-RISKING: FACTS & FIGURES C. SWIFT FCC: WHAT’s NEW? D. KYC and CYBER SECURITY

REPUTATIONAL/FINANCIAL RISKS and DE-RISKING 8 27 APAC Transactions Sent Millions Thousands Correspondents 7 26.5 APAC Active 6 26 5 25.5 4 50% 75% 25 3 24.5 2 24 1 0 23.5 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 75% of the large global banks have reported a Some will reduce their number of CBRs decline in their number of CBRs by more than 50% Transactions sent Active Correspondents Source: The World Bank Source: SWIFT / ADB Number of Active Correspondents -1.05% 3,500 3,000 -4.79% 2,500 -8.16% -4.50% -0.64% -8.38% 2,000 2014 1,500 -0.69% -10.61% -0.70% +33.71% 2015 1,000 2016 500 - Singapore Malaysia Indonesia Thailand Vietnam Philippines Cambodia Brunei Myanmar Laos 7 Darussalam

DE-RISKING: Potential consequences For Financial Institutions “(…) processing U.S. dollar checks 1. Higher costs for KYC and remittances is now lengthier and costlier, with one major bank indicating a cost 2. Difficulty to maintain and establish new relationships of US$150 per check” IMF Loss of clients or business opportunities 3. For Countries 1. Lower regional integration “ De -risking has the potential to 2. Lesser trade destabilize our economies, promote financial exclusion and 3. Slower growth increase poverty levels. ” CBCS 8

DE-RISKING EXPLAINED 75% 50% Source: SWIFT / ADB 9

DE-RISKING EXPLAINED Global review of banking 15.5 Billion $ relationships both on fines levied on financial profitability and on compliance institutions in 2015 for violation of sanctions regulations 10

DE-RISKING EXPLAINED DERISKING FACTORS: Suggested Solutions 1. COST: Reduce the cost of KYC/EDD 2. RISK: Put the right controls in place 3. TRANSPARENCY: Communicate proactively 11

HOW CAN SWIFT HELP? Global utilities DERISKING FACTORS: Suggested Solutions 1. COST: Reduce the cost of KYC / EDD  KYC Registry 2. RISK: Put the right controls in place  Sanctions Screening / Testing  Name Screening  RMA Analysis  Daily Validation Reports  Compliance Analytics  Etc. 3. TRANSPARENCY: Communicate proactively  KYCR  Audit reports (incl. security audit) 12

A. THE GLOBAL PAYMENTS INITIATIVE (GPI) B. DE-RISKING: FACTS & FIGURES C. SWIFT FCC: WHAT’s NEW? KYC Registry Sanctions Screening (NEW) Name Screening RMA Analysis (NEW) Payment Data Quality & others D. KYC and CYBER SECURITY

NSS – Demo

SWIFT Compliance: Top-4 priorities for LOCAL banks SANCTIONS KYC COMPLIANCE ANALYTICS Sanctions Screening The KYC Registry Compliance Analytics Transaction screening with Automatic List updates Global depository of due diligence documents Global view of your organization's SWIFT and data message traffic • 600+ customer institutions • • • 3,500+ financial institutions 32 financial institutions 140+ in APAC • • • 1,000+ in APAC Customer base represents 45% of SWIFT 22 central banks payments • 200+ countries and territories • 750+ end-users Sanctions Testing Test, fine-tune and optimize filters and lists with SWIFT Traffic Profile third-party insurance (NEW) Payments Data Quality Aggregated view of transaction activity with • 40 customer institutions Assess quality of originator and beneficiary high-risk jurisdictions • 4 of the top 5 US banks by asset information to comply with FATF • Recommendation 16 Over half of the top 10 European banks KYC Adverse Media • 430 subscribers to Sanctions List Monitor Access to news and regulatory notices about (NEW) Daily Validation Reports (potential) customers (NEW) Name Screening Service Detect unusual payment flows quickly and Screen individual names and customers, supplier easily RMA Analysis and employee databases Understand which of your RMAs have been dormant or inactive, hence creating List Management Service unnecessary costs and risks Manage, customize and automate list data feeds

A. THE GLOBAL PAYMENTS INITIATIVE (GPI) B. DE-RISKING: FACTS & FIGURES C. SWIFT FCC: WHAT’s NEW?  KYC Registry Sanctions Screening (NEW) Name Screening RMA Analysis (NEW) Payment Data Quality & others D. KYC and CYBER SECURITY

PROBLEM: The cost of KYC & EDD is too high Maintaining existing relationships is time-consuming, risky and costly DUPLICATED NON-STANDARDIZED INACCURATE TIME-CONSUMING

SOLUTION: SWIFT KYC Registry DUPLICATED CENTRALIZED NON-STANDARDIZED STANDARDIZED INACCURATE VALIDATED TIME-CONSUMING EFFICIENT

More than 3,500 financial institutions Standardised baseline 1,800+ in Europe, Middle East and Africa 1,000+ in Asia Pacific 600+ in the Americas Up-to-date information 200+ countries and territories worldwide C:\Users\jsoubry\Desktop\KYCR\Counterparty coverage by region 2017 v1.xlsb Data verification by SWIFT Cooperative business model Secure, user-control access Launched in December 2014 in collaboration with Bank of America Merrill Lynch, Barclays, Citi, Commerzbank, Deutsche Bank, Erste Group Bank AG, HSBC, ING, J.P.Morgan, Raiffeisen Bank International AG, Societe Generale, and Standard Chartered Bank. 19

SWIFT KYC Registry, the new global standard 500 1600 1456 434 1400 400 1200 New 1000 300 APAC Users in 800 2016… New Global Users in 2016 (Accumulative) 200 600 400 100 200 0 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Nov

"Data collection times in many cases have been reduced from days or weeks to a few hours" Unicredit “(…) Converse Bank positions itself as a more transparent, trustworthy and reliable business partner in its relations with existing and potential correspondent banks." Converse Bank "The KYC Registry will be a key differentiator in ensuring the correspondent banking industry increases the accuracy and efficiency around its KYC process. This is not a 'nice to have' but rather an imperative (…)” Standard Chartered C:\Users\jsoubry\Desktop\KYCR\KYCR Baseline & SWIFT 21 Support.pdf

A. THE GLOBAL PAYMENTS INITIATIVE (GPI) B. DE-RISKING: FACTS & FIGURES C. SWIFT FCC: WHAT’s NEW? KYC Registry  Sanctions Screening (NEW) Name Screening RMA Analysis (NEW) Payment Data Quality & others D. KYC and CYBER SECURITY